Non – Resident Individual – Capital Gain Deduction

A Non Resident Individual (NRI) is entitled to all the deductions / exemptions that are available to a resident under the head “Capital Gains” with the same provisions. If an NRI makes an effective tax planning then his capital gain could be completely exempt from tax. Here are some tax saving tips for NRI to invest the capital gain efficiently to claim maximum exemption: Invest in House Property It is very interesting to note that an NRI is not required to obtain permission from RBI to invest in house property inIndia. So if any long term capital gain arises from transfer of a residential house property or any other capital asset, the same should be invested in purchasing a residential house property, to get the entire capital gain exempted under Section 54 or Section 54F, as the case may be. Invest in Long term specified asset An NRI can invest the long term capital arises from sale of any capital asset in bonds of NHAI and REC to claim maximum deduction of Rs.50lacs under Section 54 EC. Points to be noted

  • If any capital gain arises to an NRI on conversion of a sole proprietorship / partnership firm into a company, the same is fully exempt from tax.
  • If an NRI has transfer any capital asset which was received either as a gift or under a will then any capital gain arising therefrom is fully exempt.
  • If an non – resident has transferred any bonds or shares to another non – resident, he can claim exemption on the capital gain arising on such transaction.
  • It is very important to note that any long term capital gain arising on sale of shares and securities is subject to flat tax rate of 10% . So it is advisable that an NRI should transact in shares and securities to avail a lower tax rate subject to FEMA guidelines.

This is just a synopsis of the provisions of capital gains and it is provided for awareness purpose. It provides a summary of necessary information which will help NRIs to plan their investment and lower their taxes. provides full fledged comprehensive tax planning service wherein we suggest the best investment and tax saving plans, which would minimize your total tax on income.

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